Module 7 RA 9593 Tourism Act of 2009

Week 13 Coverage
13.1 Department of Tourism’s (DOT) Power and Function
13.2 Different Attached Agency of the DOT
13.3 Salient Features of RA 9593
• Creation of Tourism Enterprise Zones (TEZ)
• Tourism Enterprise
• TEZ Operator
• Incentives of Tourism Enterprise in the TEZ and TEZ Operator
Learning Objectives
At the end of this topics the student will be able to
1. Be familiar with the attached agencies, powers and functions of the Department of
Tourism
2. Be able to identify Tourism Enterprise Zones, Tourism Enterprise, TEZ Operator
3. Be able to ascertain incentives provided for Tourism Enterprise and TEZ Operators
under RA 9593

Module Check List

Content Tasks Date Completed
Lesson Read and Understand
Readings Only the lesson herein
provided and the attached
copy of the Statute
Formative Assessment Answer the Activity

Lesson

As stated in sec 2 of RA 9593 “The State declares tourism as an indispensable element of the
national economy and an industry of national interest and importance, which must be harnessed as
an engine of socioeconomic growth and cultural affirmation to generate investment, foreign
exchange and employment, and to continue to mold an enhanced sense of national pride for all
Filipinos”

It is important for tourism and hospitality practitioners to understand RA 9593 or the Tourism Act
of 2009, as it provides the rationale of the government’s direction towards tourism development
in the Philippines.

The Republic Act 9593 also known as The Tourism Act of 2009

It is an act declaring a national policy for tourism as an engine of investment, employment, growth,
and national development, and strengthening the Department of Tourism and its attached agencies
to effectively and efficiently implement policy and for appropriate funds therefor.
Section 5 of the Tourism Act of 2009 states that the Department of Tourism :

1. Shall be the primary planning, programming, coordinating, implementing and regulatory

government agency in the development and promotion of the tourism industry, both
domestic and international, in coordination with attached agencies and other government
instrumentalities.
2. Shall instill in the Filipino the industry’s fundamental importance in the generation of
employment, investment and foreign exchange.

The powers and functions of the DOT can be found in section 6 of the Tourism Act of 2009 which
specifically enumerated the same:

(a) Formulate tourism policies, plans and projects for the development of tourism as an engine of
socioeconomic and cultural growth;

(b) Supervise and coordinate the implementation of tourism policies, plans and projects;

(c) Call upon all agencies of government to properly carry out their programs in relation to and
in coordination with the policies, plans and projects of the Department and to assist in the
implementation thereof;

(d) Communicate to the President, and the heads of departments, agencies and instrumentalities
of the government, the impact upon tourism and the economy of proposed governmental actions;

(e) Provide an integrated market development program to attract people to visit the Philippines
and enhance the prestige of the country and the Filipino people in the international community;

(f) Represent the government in all domestic and international conferences and fora, and in all
multilateral or bilateral treaties and international agreements concerning tourism, and ensure the
government’s implementation thereof and compliance with all obligations arising therefrom;

(g) Request the President for representation in all government agencies, offices, boards,
commissions and committees that may affect tourism;

(h) Call upon relevant government departments, agencies and offices, in consultation with the
private sector, to provide access to travel, to facilitate the process of obtaining and extending
visas, to integrate and simplify travel regulations and immigration procedures and to ensure their
e4cient, fair and courteous enforcement to assure expeditious and hospitable reception of all
visitors;

(i) Support, advance and promote the protection, maintenance and preservation of historical,
cultural and natural endowments, in cooperation with appropriate government agencies and the
private sector, and take appropriate measures against acts and omissions contrary to these
objectives;
(j) Monitor conditions of any community in the Philippines and, in consultation with the LGUs
and law enforcers, issue timely advisories on the safety or viability of travel to particular places
within the Philippines and on patronage of entities engaged in tourism-related activities and of
tourism products;

(k) Evaluate tourism development projects for the issuance of permits and the grant of incentives
by appropriate government agencies, establish a databank of tourism areas and projects for
investment purposes, and encourage private sector investment and participation in tourism
activities and projects;

(l) Formulate and promulgate, in consultation with the LGUs, the private sector industries and
other tourism stakeholders, rules and regulations governing the operation and activities of all
tourism enterprises including, but not limited to, a national standard for licensing, accreditation
and classification of tourism enterprises, prescribing therein minimum levels of operating quality

and efficiency for their operation in accordance with recognized international standards, impose
reasonable penalties for violation of accreditation policies and recommend to the LGUs
concerned the suspension or prohibition of operation of a tourism enterprise;

(m) Monitor the LGUs’ compliance to national standards in the licensing of tourism enterprises,
receive and investigate complaints concerning these enterprises, and act on such complaints to
properly implement the provisions of this Act;

(n) Ensure the proper coordination, integration, prioritization and implementation of local
tourism development plans with that of the national government;

(o) Provide technical assistance to LGUs in destination development, standard setting and
regulatory enforcement;

(p) Undertake continuing research studies and survey to analyze economic conditions and trends
relating to tourism and travel, and compile and integrate a statistical databank on the tourism
industry;

(q) Delegate to regional offices, in coordination with LGUs, specific powers and functions in the
implementation of tourism policies, plans and projects;

(r) Collect necessary fees and charges for the proper implementation of tourism policies, plans
and projects; and

(s) Exercise such other powers and functions as are necessary for the implementation of this Act.
DOT attached agencies

Below are the list and descriptions of the different attached agencies of the DOT and the laws that
created and the law .

Tourism Promotions Board DOT attached agency created by

pursuant to the Tourism Act of 2009
also known as RA 9593
Tourism Infrastructure and Enterprise Zone Authority DOT attached agency created by
pursuant to the Tourism Act of 2009
also known as RA 9593
Duty Free Philippines DOT attached agency created pursuant
to Executive Order No. 46 (1986)
Intramuros Administration DOT attached agency created pursuant
to Presidential Decree No. 1616
(1979), as amended
National Parks Development Committee DOT attached agency created under
Executive Order No. 30 (1963)
Nayong Pilipino Foundation DOT attached agency created under
Presidential Decree No. 37 (1972)
Philippine Retirement Authority DOT attached agency created pursuant
to Executive Order No. 1037 (1985)
Philippine Commission on Sports Scuba Diving By the virtue of the Letter of
Instruction no. 745 issued Sept 29,
1978 the Philippine Commission on
the Promotion and Development
of Sports SCUBA Diving was created

Significant features of the Tourism Act of 2009

• Establishment of Tourism Enterprise Zones
• Creation Tourism Infrastructure and Enterprise Zone Authority
• Creation of Tourism Promotions Board

Tourism Enterprise Zone (TEZ)

To be able to be categorized as a TEZ the following characteristics must be present in a

geographical area:

(a) The area is capable of being defined into one contiguous territory;

(b) It has historical and cultural significance, environmental beauty, or existing or potential
integrated leisure facilities within its bounds or within reasonable distances from it;

(c) It has, or it may have, strategic access through transportation infrastructure, and reasonable
connection with utilities infrastructure systems;
(d) It is sufficient in size, such that it may be further utilized for bringing in new investments in
tourism establishments and services; and

(e) It is in a strategic location such as to catalyze the socioeconomic development of neighboring

communities.

Tourism Enterprise

It refers to facilities, services and attractions involved in tourism.

RA 9593 regarded the following as tourism enterprises:

• travel and tour services;

• tourist transport services;
• tour guides;
• adventure sports services and other sports activities of significant tourism potential;
• convention organizers;
• accommodation establishments;
• tourism estate management services;
• restaurants;
• shops;
• department stores;;
• sports centers
• recreational centers;
• spas;
• museums and galleries;
• theme parks;
• convention centers and
• zoos

TEZ Operator

According to sec 79 of RA 9593 “All tourism enterprise zone shall be managed and administered
by a TEZ Operator.”

What can be a TEZ Operator?

1. A duly incorporated entity under the Corporation and other relevant laws, or
2. The Local Government Unit (LGU) that has territorial jurisdiction of the TEZ
3. Any other instrumentalities of the government in pursuit of their mandates, where capital
shall be provided by either:
a. LGU
b. Private Entities

Incentives of TEZ Operators and Registered Tourism Enterprise:

The TEZ Operator and Registered Tourism Enterprise are provided with fiscal and non-fiscal
incentives.

Under section 86 of RA 9593, the fiscal incentives available for TEZ Operators and Registered
Tourism Enterprise are as follows:

(a) Income Tax Holiday

(b) Application of a Gross Income Taxation
(c) Tax Free importation of Necessary Tourism Equipment and Capital Investment
(d) Tax Free importation of Transportation and Spare Parts.
(e) Tax Free importation of Goods and Services consumed in the course of services
(f) Tax Credit equivalent to all national internal revenue taxes paid on all locally-sourced
goods and services directly or indirectly used by the registered enterprise
(g) Social Responsibility Incentive

Income Tax Holiday for a period of six (6) years

• New enterprises in Greenfield and Brownfield Tourism Zones shall, from the start of
business operations, be exempt from tax on income for a period of six (6) years.

• This income tax holiday may be extended if the enterprise undertakes a substantial
expansion or upgrade of its facilities prior to the expiration of the first six (6) years.

• An existing enterprise in a Brownfield Tourism Zone shall be entitled to avail of a non-

extendible income tax holiday if it undertakes an extensive expansion or upgrade of
facilities.

• Such an income tax holiday shall consider the cost of such expansion or upgrade in
relation to the original investment, but shall in no case exceed six (6) years to be counted
from the time of completion of the expansion or upgrade

The provisions of this subsection shall likewise apply to tourism enterprises outside the zones.

Gross Income Taxation

In lieu of all other national and local taxes, license fees, imposts and assessments, except real
estate taxes and such fees as may be imposed by the TIEZA, a new enterprise shall pay a tax of
five percent (5%) on its gross income earned, which shall be equally distributed to the following:

(1) 1/3 LGU

(2) 1/3 National Government

(3) 1/3 TIEZA

Tax Free on Imported Necessary Tourism Equipment and Capital Investment

• Subject to rules and regulations which properly define capital investments and equipment
necessary for various kinds of tourism enterprises, registered enterprises shall be entitled
to an exemption of one hundred percent (100%) of all taxes and customs duties on
importations of capital investment and equipment.

Tax Free on Imported Transportation and Spare Parts.

Provided, That the following conditions are present:

• Transportation and spare parts to be imported are not manufactured domestically

1. in sufficient quantity,
2. of comparable quality and
3. at reasonable prices
• The Transportation and Spare Parts are reasonably needed
• Used exclusively by an accredited tourism enterprise

Goods and Services

(1) Importation of goods actually consumed in the course of services actually rendered by or
through registered enterprises within a TEZ shall enjoy one hundred percent (100%) exemption
from all taxes and customs duties:

Provided, however, That no goods shall be imported for the purpose of operating a wholesale or
retail establishment in competition with the DFPC; and

(2) A tax credit equivalent to all national internal revenue taxes paid on all locally-sourced goods
and services directly or indirectly used by the registered enterprise for services actually rendered
within the TEZ.

Social Responsibility Incentive.

A registered enterprise shall be entitled to a tax deduction equivalent to a reasonable percentage,

not exceeding fifty percent (50%).

For costs that the tourism enterprise shoulders for the following:

a. cost of environmental protection or

b. cultural heritage preservation activities,
c. sustainable livelihood programs for local communities, and
d. other similar activities.
 Section 87 of Article 9593 provides the different non-fiscal incentives available to TEZ
Operators and Registered Tourism Enterprises. The following incentives may, in the discretion
of the TIEZA Board, be granted to registered tourism enterprises within TEZs:

(a) Employment of Foreign Nationals;

(b) Special Investor’s Resident Visa;
(c) Foreign Currency Transactions
(d) Requisition of Investment;
(e) Lease and Ownership of Land

(a) Employment of Foreign Nationals

• A registered enterprise may employ foreign nationals in executive, supervisory, technical

or advisory positions for such reasonable periods and under such terms as may be
provided by the TIEZA Board,
• For the proper protection and representation of foreign investments in registered
enterprises, and
• To ensure easy travel into and out of the Philippines by such nationals and their
immediate families;

(b) Special Investor’s Resident Visa. Under such terms as may be provided by the TIEZA Board,

• A foreign national who shall have made an investment with a value of at least Two
hundred thousand dollars (USD200,000.00) in a registered enterprise shall be entitled to a
special investor’s resident visa.
• With such visa, the foreign national shall be entitled to reside in the Philippines while his
or her investment subsists.
• Subject to regulations to be issued by the Bureau of Immigration (BI),
• The TIEZA shall issue working visas renewable every two (2) years to foreign personnel
and other aliens, possessing highly-technical skills which no Filipino within the TEZ
possesses,
• After they have secured Alien Employment Permits (AEP) from the DOLE.
• The names of aliens granted permanent resident status and working visas by the TIEZA
shall be reported to the BI within thirty (30) days after issuance thereof;

(c) Foreign Currency Transactions. Subject to the provisions of Section 72 of Republic Act No.
7653, as amended, otherwise known as the New Central Bank Act:

1. Repatriation of Investments. In the case of foreign investments, the right to repatriate the
entire proceeds of the liquidation of the investment in the currency in which the
investment was originally made and at the exchange rate prevailing at the time of
repatriation.
2. Remittance of Foreign Exchange. The right to remit earnings from a foreign investment
in the currency in which the investment was originally made and at the exchange rate
prevailing at the time of remittance.
 3. Foreign Loans and Contracts. The right to remit at the exchange rate prevailing at the
time of remittance such sums as may be necessary to meet the payments of interest and
principal on foreign loans and foreign obligations arising from technological assistance
contracts.
4. Requisition of Investment. There shall be no requisition of the property of registered
enterprises, except in the event of war or national emergency, and only for the duration
thereof. In any case, the affected person shall be entitled to just compensation, and shall
have the right to repatriate such compensation as provided in paragraph (c) above; and

(e) Lease and Ownership of Land.

1. Lands and buildings in each TEZ may be leased to foreign investors for a period not
exceeding fiftyty (50) years, renewable once for a period of not more than twenty-five
(25) years.
2. The leasehold right acquired under long-term contracts may be sold, transferred or
assigned, subject to the conditions set forth under the Investor’s Lease Act.

Tourism Enterprises Outside TEZs

Section88 of RA 9593 is about incentives available to Tourism Enterprises outside TEZs.

Upon compliance with the requirements provided by law, they shall be entitled to avail of any
economic incentives found under existing laws, such as

1. Executive Order No. 226 (1987), otherwise known as the Omnibus Investments Code;
2. Republic Act No. 7042, as amended by Republic Act No. 8179, otherwise known as
the Foreign Investments Act;
3. The Special Economic Zone Act; and
4. The Bases Conversion and Development Act, among others, subject to the last
paragraph of Section 86 (a), at the option of the said enterprises.

Subject to rules and regulations jointly promulgated by the DOT and the TIEZA, an existing
accommodation establishment not located within a TEZ shall be entitled to claim an income tax
holiday for up to six (6) years for the following:

• any significant expansion,

• significant renovation or
• upgrade

In its facilities in relation to the amount of the original investment. They shall also be entitled to
import capital equipment free of taxes and duties when necessary for such expansion, renovation
or upgrade.
Tourism enterprises may avail of incentives under the Omnibus Investments Code: Provided, That:

(1) Tourism activities shall always be included in the Investment Priorities Plan;

(2) Rules and regulations concerning the grant of incentives to tourism enterprises shall be jointly
formulated by the Board of Investments (BOI) and the DOT;

(3) The income tax holiday, provided under Section 39.1 of the Omnibus Investments Code shall
also apply to existing accommodation enterprises undergoing substantial capital infusion for
expansion or substantial upgrade of facilities; and

(4) Accredited tourism enterprises shall be entitled to import transportation and accompanying
spare parts free of taxes and duties: Provided, however, That the following are observed:

• Transportation shall be exclusively used by the enterprise in its operations, and

• Such are not manufactured domestically in sufficient quantity, comparable quality and
prices.

Note:

Tourism enterprises located in special economic zones, created under the Special Economic Zone
Act or by special charter, shall continue to be governed by the same.

The incentives offered under this Act shall be without prejudice to the availment of other incentives
provided under other laws, such as, but not limited to,

• those concerning infrastructure,

• or micro-, small- and medium enterprises.

However, where such laws provide for similar incentive schemes as those contained herein, the
investor may elect to avail of the scheme provided only under one particular law, decree or
issuance.

Reference

https://www.officialgazette.gov.ph/2009/05/12/republic-act-no-9593-s-2009/

https://www.officialgazette.gov.ph/section/briefing-room/department-of-tourism/
-